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April 2018

The Israel Tax Authority in February published a circular draft clarifying the classification of income from residential units. The circular explains the considerations according to which the income from residential units should be considered income from business, rather than passive income (private income entitling the landlord to potentially lower tax rates). Based on the current draft: Leasing 10 or more residential units constitutes a fully taxable business according to the Tax Authority, with tax rates up to 45-50 percent Individuals leasing 5-9 residential units will have to convince the Israel Tax Authority that they should be granted the passive income rates, after

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